Duke  University  Libraries 


REPORT  OF  THE  SECRETARY  OF  TREASURY. 


Treasury  Department, > 
March  14th,  1862.      I 
Sir  :   At  the  first  meeting  of  the  Congress  of  the  Perma- 
nent Government,  it  seems  proper  to  present  to  its  members 
a  review  of  the  financial  measures  of  the  Provisional  Gov- 
ernment, and  of  the  position  in  Avhich  they  now  stand. 

At  the  commencement  of  the  Government  a  revenue  sys- 
tem was  adopted,  which  was  deemed  adequate  to  its  support, 
had  peace  continued.  The  Tariff  was  greatly  reduced,  and 
all  discriminating  duties  on  ships  and  cargoes  were  abolish- 
ed. The  free  navigation  of  the  waters  of  the  Confederate 
States  was  offered  to  all  the  world,  and  the  Mississippi  river 
was  recognized  as  a  great  highway  of  the  States  upon  its 
waters. 

The  action  of  the  United  States  Government  admonished 
us  to  prepare  for  war.  The  presumed  dimensions  of  that 
war  are  exhibited  by  the  financial  measures  which  Congress 
adopted.  They  authorized  an  issue  of  one  million  of  dol- 
lars in  Treasury  Notes,  of  denominations  not  less  than  fifty 
dollars,  payable  in  one  year,  at  an  interest  of  $3.65  per 
cent.  They  also  authorized  a  loan  of  fifteen  millions  of 
dollars,  for  ten  years,  at  an  interest  of  8  per  cent.,  secured 
by  an  export  duty  of  one-eighth  of  a  cent  per  pound  on  raw 
cotton,  and  directed  the  Secretary  of  the  Treasury  to  devise 
a  plan  for  its  redemption. 

The  plan  adopted  by  the  Secretary  provided  that  the  an- 
nual produce  of  the  export  duty  should  be  applied  first  to 
pay  the  interest,  and  then  to  purchase  from  the  lowest  bid- 
ders so  much  of  the  principal  as  the  surplus  would  reach, 
reserving  a  discretion  to  the  Secretary  of  the  Treasury  as 
to  the  acceptance  of  bids  where  they  demanded  more  than 
the  face  of  the  bonds. 

Considerable  difficulty  arose  in  disposing  of  this  loan, 
from  the  fact  that  in  some  of  the  Confederate  States  the 
banks  had  suspended  specie  payments,  while  in  others  they 


were  paying  out  coin.  The  suspended  banks,  however,  by 
a  joint  and  patriotic  eftort  determined  to  make  their  notes, 
when  paid  in,  for  the  loan,  equivalent  to  coin,  and  there- 
upon the  loan  was  successfully  negotiated. 

The  war  had  now  so  much  enlarged  its  proportions  as  to 
demand  sums  of  far  greater  magnitude.  On  the  16th  May, 
authority  was  given  to  issue  twenty  millions  of  dollars  in 
Treasury  Notes  of  smaller  denominations,  payable  in  two 
years,  without  interest,  and  intended  to  circulate  as  cur- 
rency ;  and  a  further  sum  of  thirty  millions  in  8  per  cent, 
bonds.  The  holders  of  the  Treasury  Notes  were  allowed  to 
fund  them  in  the  bonds  of  the  Confederate  States,  payable 
in  ten  years ;  and  as  an  experiment,  these  bonds  were 
allowed  to  be  reconverted  into  Treasury  Notes  at  the  plea- 
sure of  the  holder. 

At  this  stage  of  our  progress  we  were  brought  to  a  stand 
by  the  difficulty  of  preparing  Treasury  Notes  in  the  Con- 
federate States.  We  had  become  so  entirely  dependent 
upon  the  North,  that  but  a  single  bank-note  engraver  could 
be  found  in  the  Confederate  States  ;  and  none  of  the  mate- 
rial necessary  for  a  bank  note  was  manufactured  amongst 
us.  We  were,  therefore,  compelled  to  substitute  lithographs 
for  steel  engravings,  and  to  create  the  manufacture  of  bank 
note  paper.  The  delays  incident  to  such  a  state  of  things, 
produced  many  difficulties,  and  rendered  it  impossible  to 
furnish  an  amount  in  notes  adequate  to  meet  the  daily  re- 
quisitions of  the  Departments.  The  banks  were  applied  to 
for  a  loan  of  their  notes  to  meet  the  exigency.  They 
proraptly  responded,  and  the  balance  due  them  is  set  forth 
in  one  of  the  schedules  accompanying  this  report. 

The  increasing  dimensions  of  the  war  induced  the  Con- 
gress, at  its  next  session,  to  expand  the  issue  of  Treasury 
Notes  to  one  hundred  millions,  and  to  authorize  a  loan  on 
bonds  or  stock  for  one  hundred  millions  more.  The  notes 
were  made  payable  six  months  after  the  ratification  of  a 
treaty  of  peace  with  the  United  States;  and  in  order  to  pre- 
vent their  redundancy,  it  was  provided  tliat  any  holder  might 
fund  them  in  eight  per  cent,  bonds ;  or,  to  the  extent  of 
twenty  millions,  might  exchange  them  for  bonds  payable  in 
ten  years,  at  an  interest  not  exceeding  seven  per  cent.,  re- 
exchangeable  for  Treasury  Notes. 

Throughout  the  Confederacy  the  banks  and  people  prompt- 
ly responded  ta  these  measures  of  the  Government,  and  every- 
where the  Treasury  Notes  were  accepted  as  currency.  These 


notes  thus  became  part  of  the  regular  circulating  medium, 
and  furnished  the  Government  with  a  large  and  available 
loan,  free  of  interest-  In  return,  the  Government  owed  a 
duty  to  take  all  proper  means  to  prevent  an  over-issue,  and 
the  depreciation  consequent  thereupon.  It  was  therefore 
provided,  that  the  notes  might  be  funded  at  the  pleasure  of 
the  holder  in  Confederate  bonds  at  an  interest  of  eight  per 
cent.  ;  and  to  secure  the  punctual  payment  of  the  principal 
and  interest  of  these  bonds,  a  War  Tax  of  one-half  of  one 
per  cent,  was  imposed  upon  the  chief  articles  of  property  in 
the  Confederate  States. 

The  Fifteen  Million  Loan  was  taken  up  chiefly  by  the 
banks  and  by  the  comniercinl  community.  It  was  deemed 
proper  to  bring  this  second  loan  more  particularly  to  the 
attention  of  the  planters.  Measures  were  taken  to  canvass 
the  cotton  region  for  subscriptions,  payable  from  the  pro- 
ceeds of  the  growing  crop.  These  subscriptions  amount  to 
about  twenty  millions,  and  had  our  ports  been  open,  would 
at  this  time  have  furnished  available  means  for  the  support 
of  the  Government.  But,  in  the  present  state  of  things, 
they  stand  only  as  a  basis  of  credit,  and  are  realized  from 
time  to  time  as  sales  of  the  crop  are  effected.  These  sales 
are  sufficiently  extensive  to  require  the  appointment  of 
agents  at  the  principal  places  of  delivery  to  collect  the  sub- 
scriptions;  and  they  have  accordingly  been  appointed.  I 
herewith  communicate  a  copy  of  the  instructions  given  to 
them. 

The  bonds  for  this  One  Hundred  Million  Loan  were  au- 
thorized to  be  issued  for  any  period  less  than  twenty  years. 
The  interest  being  at  eight  per  cent.,  it  was  deemed  best  to 
make  the  period  as  short  as  possible.  The  War  Tax  had 
been  adjusted  to  raise  a  sufficient  amount  to  pay  part  of  the 
principal  as  well  as  the  Avhole  interest  of  the  debt ;  and  as 
soon  as  peace  might  be  restored,  a  judicious  economy  would 
enable  the  Government  to  pa}-  oft'  the  debt,  if  distributed 
over  a  series  of  ^^ears.  And  even  should  it  not  be  found 
convenient  to  pay  off  the  instalments  as  they  became  due, 
the  improved  credit  of  the  Government  in  time  of  peace 
would  enable  it  to  raise  money  at  a  less  rate  of  interest, 
'wherewith  it  could  discharge  its  obligations. 

These  considerations  induced  me  to  arrange  the  debt  upon 
the  plan  of  Mr.  James  G.  Holmes,  of  South  Carolina ;  the 
principle  of  which  is  the  distribution  of  the  debt  into  instal- 
ments, which  call  for   the  payment  annually  of  a  fixed  sum 


for  principal  and  interest,  so  adjusted  as  to  extingiiisli  the 
whole  in  twenty  years.  This  is  accomplished  by  making 
the  first  instalment  of  principal  payable  in  two  years,  and 
^the  last  in  twenty,  and  distributing  the  payments  into  thirty- 
six  semi-annual  periods.  This  constant  diminution  of  the 
princi-al  annually  diminishes  the  interest,  and  leaves  a 
larger  portion  of  the  fixed  payment  applicable  to  the  remain- 
ing principal,  until  the  whole  debt  is  discharged. 

This  scheme  of  public  debt  (it  is  believed)  will  be  found 
imore  suitable  to  the  wants  of  our  community,  particularly 
at  the  present  time.  The  planting  community  will  more 
readily  be  induced  to  take  bonds  Avhich  they  can  use  in  pay- 
ment, or  which  will  be  paid  up  at  short  periods,  and  which 
from  the  small  amount  of  money-capital  usually  seeking  in- 
vestment in  bonds,  they  cannot  expect  to  realize  promptly 
by  the  usual  method  of  sale. 

I  now  proceed  to  exhibit  the  results  of  these  measures 
and  the  present  condition  of  the  Treasury  : 

The  receipts  into  the  Treasury  from  all  sources  during 
the  existence  of  the  Provisional  Government,  say  from  17th 
February,  1851,  to  18th  February,  1862,  are  as  follows: 

Customs" $1,270,875  48 

Miscellaneous 988,888  20 

Fifteen  million  loan 15,0()(),()00  00 

Bank  loan 9,813,515  49 

One  hundred  million  loan 16,152,GG0  02 

Interest  and  premium 33,785   1 3 

Treasury  notes 95,790,250  00 


$139,051,004  32 
The  total  amount  of  expenditures  is  as  follows  : 
Civil,   Miscellaneous,  Foreign   Intercourse 

and  Public  Debt $5,045,660   82 

War 152,844,430  20 

Navy 7,600,485  89 


$165,490,576  91 

The  difference  between  these  two  aggregates  to  wit: 
$26,439,572  59  exhibits  the  balance  remaining  in  the  Trea- 
sury to  the  credit  of  disbursing  officers  throughout  the  Con- 
federacy. This  balance  will  be  paid  in  Treasury  Notes  as 
the  same  may  be  called  for,  and  when  paid  will  add  that 
amount  to  the  issue :  making  for  the  whole  issue  under  the 
Provisional  Government  the   sum  of $122,229,822  59 


The  Provisional  Congress  has  extended  its  appropriations 
for  the  support  of  the  Government  as  far  as  the  first  of  April 
ensuing.     The  total  amount  of  appropriations  made  up  to 

that  period  is $249,285,086   26 

From  which  deduct  those   already   paid  as 

above 165,490,576   91 

Leaves  yet  to  be  paid 83,794,509  39 

The  means  which  have  been  provided  to  pay  this  amount 
are: 

1.  The  remainder  of  Treasury  Notes  authorized  to  be 
issued. 

Whole  amount  authorized $li50,000,000 

Amount  absorbed  by  expenditures  of  the 

Provisional  Government 1 22,229,822   59 

Balance 27,770,177  41 

This  balance  is  subject  to  further  abatement  on  account  of 

the  temporary  loan  made  by  the  banks,  which  they  have  the 

right  to  call  for  in  Treasury  Notes. 

This  loan  amounts   to $9,813,545  49 

Leaving    the    amount    of    Treasury  Notes 

which  may  still  be  issued $17,956,631   92 

2.  The  next  item  of  means  proyidcd  by  the  Provisional 
Congress  is  the  remainder  of  the  one  hundred  million  loan 
authorized  by  the  War  Tax  Act. 

Whole  amount  authorized $100,000,000 

Amount  already  issued 16,152,660  03 

Balance 83,847,339   98 

Add  the  balance  of  Treasury  Notes  author- 
ized       17,966,631   92 

Total  means 101,803,971   90 

Balance  of  appropriations  as  above 83,794,509   35 

Surplus 18,009,462   55 

From  this  abstract  it  appears  that  it  will  require  about 
sixty-six  millions  of  the  one  hundred  million  loan,  together 
with  all  the  Treasury  Notes  authorized  by  law,  to  pay  the  ap- 
propriations already  made.  It  is  not  probable,  however,  that 
all  these  appropriations  will  be  required.  Several  of  them 
are  made  upon  contingencies  ;  and,  in  no  event,  is  it  likely 
that  they  will  all  be  called  for  within  the   period  for  which 


they  were  appropriated.  Continual  accession  to  the  means  of 
the  Treasury  is  already  had  from  the  Produce  Loan.  The 
subscriptions  to  this  loan  are  portions  of  the  One  Hundred 
Million  Loan,  and  are  therefore  applicable  to  the  current 
expenditures.  Treasury  Notes  too  are  deposited  every  day 
-with  the  Treasurer  and  Assistant  Treasurers,  upon  the  ar- 
rangement -which  authorizes  their  deposit  on  call.  And  if 
we  can  preserve  the  confidence  of  the  country,  these  de- 
posits will  absorb  a  large  portion  of  the  bank  deposits  and 
much  of  the  domestic  exchanges  of  the  country,  as  soon  as 
it  is  understood  that  they  can  be  drawn  or  transferred  from 
place  to  place  at  the  pleasure  of  the  holder. 

It  is  obvious,  too,  that  these  call  deposits  will  assist  in 
relieving  any  redundancy  in  the  currency,  by  withdrawing 
a  part  of  the  circulation;  and  it  is  hoped  that,  with  the  aid 
of  funding  in  the  permanent  debt,  this  dangerous  method  of 
raising  money  will  be  rendered  safe.  To  enable  the  Trea- 
sury to  use  the  whole  amount  deposited,  it  would  be  well  to 
give  to  that  Department  authority  to  hold  in  reserve  and 
issue  a  certain  surplus,  in  case  of  sudden  and  unexpected 
calls  by  depositors. 

The  next  matter  in  order  is  the  consideration  of  the  esti- 
mates for  expenditures  and  supplies,  for  the  period  desig- 
nated by  Congress,  say,  to  the  first  of  December  next. 

The  estimates  of  expenditure,  furnished  by  the  different 
Departments,  arc  as  follows : 

Civil  List $  617,572  74 

Miscellaneous 2,466,223  49 

Foreign  Intercourse 60,0!)!)  00 

Public  Debt 1,500,000  00 

War 199,799,725  58 

Navy 9,560,905  29 

$214,004,427   10 

The  only  means  already  provided,  to  supply  these  de- 
mands consist  of — 

1.  The  balance  of  the  One  Hundred  Million  Loan, 
above  stated,  which,  when  realized,  would  amount  to 
$17,847,339  98. 

2.  And  the  nett  proceeds  of  the  War  Tax.  The  amount 
of  this  item  is  rendered  uncertain  by  the  occupation  of  some 


of  our  territory  by  the  enemy.  It  must  be  set  down  at  a 
conjectural  amount,  sa}^  at  twenty  millions. 

The  remainder  of  the  supplies  must  be  obtained  by  one 
or  more  of  the  following  methods : 

One.  Taxes 

Two.  Treasury  Notes. 

Three.  Loans. 

1.  Taxes.  Experience  has  fully  established  that  the  ex- 
penses of  modern  war  cannot  be  maintained  by  the  taxes  to 
be  levied  during  a  state  of  war.  The  utmost  that  can  be 
obtained  by  taxes,  at  such  a  time,  is  the  establishment  of  a 
solid  basis  for  loans,  and  the  pledging  a  sufficient  amount  of 
annual  income  to  discharge  the  principal  and  interest  of 
such  loans,  as  they  become  payable.  The  War  Tax,  levied 
by  the  Provisional  Congress,  stands  upon  this  basis;  its 
proceeds  are  too  small  for  any  other  purpose. 

2.  Treasury  Notes.  Experience  has  also  established  that 
this  is  the  most  dangerous  of  all  the  methods  of  raising 
money.  The  danger  arises  from  the  fact  that,  in  borrowing 
money  in  this  form,  the  Government  interferes  with  the 
measures  of  value.  The  amount  of  currency  usually  circu- 
lating in  a  country  forms  its  measure  of  value.  While  this 
consists  of  gold  and  silver,  it  cannot  become  redundant,  be- 
cause any  excess  would  immediately  be  exported  to  other 
countries.  But  when  a  currency  has  no  value  except  in  one 
country,  this  security  against  excess  is  lost,  and  every  addi- 
tion becomes  permanent  circulation.  Every  money-value 
must  re-adjust  itself  to  this  increase,  and  the  result  is,  that 
to  obtain  a  comparatively  small  amount  of  money,  the  values 
of  the  entire  pioperty  of  the  community  are  changed.  The 
Government  itself,  in  time  of  war,  becomes  the  greatest  suf- 
ferer. Being  the  largest  purchaser  of  commodities,  it  buys 
at  the  inflated  prices  which  it  has  itself  produced,  and  loses 
more  in  its  payments  than  the  amount  it  has  attempted  to 
raise  by  its  currency.  The  relations  of  debtor  and  creditor 
are  disturbed  by  every  successive  issue,  and  the  result  is  a 
prostration  of  public  credit  and  private  confidence.  The 
facility  with  which  a  government  paper  currency  may  be 
issued,  offers 'strong  temptations  to  resort  to  it  in  difficult 
times.  But  the  disastrous  consequences  which  have  always 
attended  its  over-issue,  warn  us  to  mark  with  care  the  boun- 
daries within  which  it  should  be  confined. 

With  tliis  view  the  Provisional  Congress   have   anxiously 
sought  for  appropriate  checks  and  absorbents.     They  began 


8 

with  an  issue  of  twenty  millions,  which  has  been  gradually 
extended  to  one  hundred  and  fifty  millions.  Feeling  their 
way  with  each  successive  issue,  they  have  provided  two 
means  of  relieving  redundancy.  One  is  the  permission  to 
fund  in  permanent  securities  of  the  Government  at  8  per 
cent. ;  the  other  is  a  deposit  on  call  at  6  per  cent.  It  Avas 
supposd  that  any  redundancy  would  be  absorbed  by  one  or 
the  other  of  these  outlets,  and  that  the  remainder  wouhl 
justly  measure  the  actual  wants  of  the  community.  Within 
this  limit  a  Government  currency  may  be  safely  and  even 
beneficially  used. 

In  a  former  report  it  was  shown  that  the  actual  currency 
of  the  Confederate  States,  before  the  present  war,  might  be 
estimated  at  eighty-five  and  a  half  millions,  and  it  was  sug- 
gested that  it  might  safely  be  enlarged  to  one  hundred  mil- 
lions. Since  that  period  it  has  been  deemed  necessary  to 
extend  the  issue  to  one  hundred  and  fifty  millions.  At  the 
date  of  the  statements  above  referred  to  the  actual  issuee 
amounted  only  to  $95,790,250  ;  but  since  that  period  they 
have  been  increasing  daily,  until  at  present  they  amount 
to  $107,98 -",855.  The  evidence  of  redundancy  begins  to 
appear  in  the  freedom  with  which  call  deposits  are  made,  and 
the  high  prices  of  specie  and  foreign  exchange  are  partly 
the  result  of  that  same  cause.  But  on  the  other  hand,  the 
freedom  with  which  Treasury  Notes  are  circulated  at  par 
with  Bank  notes,  indicates  an  equal  confidence  in  both  ; 
while  the  capacity  they  have  of  being  funded,  gives  them  a 
superior  claim  on  public  confidence. 

The  fact  that  so  large  an  issue  can  thus  be  supported, 
Avhilc  at  the  same  time  tho  States  are  increasing  the  circu- 
lation by  their  issues  of  Treasury  Notes,  seems  to  prove  that 
the  Treasury  Notes  of  this  Government  perform  some  func- 
tion which  was  not  foreseen;  and  that  function  is  probably 
their  agency  in  supplying  domestic  exchange  for  the  Con- 
federacy. So  long  as  the  public  confidence  can  be  preserved, 
this  effect  would  attend  a  currency  receivable  at  all  points 
at  par.  And  while  it  affords  a  larger  field  of  circulation,  it 
admonishes  us  to  use  the  utmost  caution,  lest  the  credit  of 
the  Government  should  be  impaired.  Under  existing  cir- 
cumstances, it  seems  to  me  that  Congress  might  venture  to 
authorize  an  issue  of  fifty  millions  more,  if  they  will  pro- 
vide means  for  absorbing  redundancy  similar  to  those  al- 
ready provided  for  existing  issues.  This  will  raise  the  issue 
to  tvro  hundred  millions,   an  amount   at  which   we   should 


pause  in  this  direction,  until  we  can  see  the  effects  upon  the 
country. 

3.  A  large  balance  of  supplies  remains  to  be  provided, 
and  this  must  be  procured  from  the  third  resource,  namely: 
Loans  by  means  of  funded  debt.  There  is  no  limit  to  this 
resource  short  of  the  ability  of  the  Nation  to  pay.  ^  And 
the  just  measure  of  this  ability  is  the  amount  which  it  can 
raise  by  taxes  or  revenues,  to  refund  such  loans.  So  long 
as  the  interest  of  a  debt  can  be  secured  with  certainty,  to- 
gether with  so  much  of  the  principal  as  will  discharge  the 
debt  in  a  reasonable  time,  that  debt  may  be  made  available. 
The  firsc  step  then  to  be  taken  by  the  Government  towards 
enlarging  its  loans,  is  to  enlarge  the  means  of  repaying 
them ;  in  other  words,  the  taxes  must  be  increased. 

The  War  Tax  has  already  put  in  motion  all  the  machinery 
requisite  for  levying  a  tax.  It  has  selected  those  articles 
which  can  best  bear  the  burden,  and  it  levies  on  their  value 
the  very  moderate  rate  of  one-half  of  one  per  cent.  The 
simplest  of  all  plans,  therefore,  would  be  an  increase  of  this 
tax  to  a  sufficient  amount  to  pay  the  loan  required  upon  the 
principles  already  adopted. 

The  Permanent  Constitution  requires  that  this  plan  be 
modified.  It  difters  from  the  Constitution  for  the  Provi- 
sional Government,  in  re-enacting  the  clause  Avhich  pro- 
vided for  an  apportionment  of  direct  taxes  among  the  States. 
The  arrangement  of  the  tax  is  thus  made  more  complex. 
But  as  soon  as  Congress  shall  declare  the  aggregate  amount 
to  be  raised,  the  assessments  already  made  may  be  assumed 
as  a  basis  for  its  distribution,  and  will  materially  aid  the 
further  details. 

A  sufficient  tax  will  secure  the  lenders.  But  the  enquiry 
naturally  arises,  where  are  these  lenders  to  be  found  ?  Our 
people  have  property  in  abundance,  but  they  have  no  sur- 
plus capital  in  money.  Our  plans  must  be  modified  to  meet 
this  difficulty.  We  must  accept  products  in  exchange  for  the 
bonds  wherever  they  can  be  made  available  for  the  wants  of  the 
Government.  The  farmer  has  supplies  of  food  for  the  army  ; 
the  manufacturer  has  clothing  or  other  commodities;  the 
railroad  company  has  transportation ;  the  miner  has  coal 
and  iron  ;  all  of  which  the  Government  needs.  If  these 
supplies  can  be  obtained  in  exchange  for  Confederate  Bonds, 
a  loan  in  kind  is  effected  on  credit,  to  the  satisfaction  of 
of  both  parties.  An  exchange  of  Treasury  Notes  for  the 
same  article  is  a  purchase  for  cash,  inasmuch  as  Treasury 


10 

Notes  are  now  money  like  bank  notes.  The  issue  of  such 
notes  must,  of  necessity,  have  narrower  limits  than  the 
issue  of  bonds;  and,  like  all  cash  assets,  they  are  more 
readily  exhausted.  The  wdiole  amount  of  Treasury  Notes 
which  the  Government  can  put  in  circulation  will  be  re- 
quired for  the  pay  of  the  army ;  for  the  wages  of  mechanics, 
and  for  other  expenditures,  which  cannot  be  paid  with  bonds. 
To  use  them,  therefore,  for  other  purposes,  iti  to  leave  these 
necessary  items  unpaid,  and  thereby  to  discredit  the  Gov- 
ernment. 

There  is  also  another  method  to  be  considered,  in  which 
the  bonds  of  the  Government  may  be  made  available.  Large 
sums  must  be  paid  abroad  for  purchases  of  arms,  munitions 
of  w^ar,  and  Army  and  Navy  supplies.  The  cotton  and 
tobacco  crops  have  usually  furnished  the  means  of  making 
foreign  payments ;  and  they  can  probably  now  be  used  with 
advantage  for  the  same  purpose.  The  holders  of  cotton 
have  already,  to  a  large  amount,  agreed  to  accept  bonds  for 
the  sales  of  their  cotton.  They  may  be  induced  to  close 
their  subscriptions  at  once,  by  delivering  to  the  Govern- 
ment in  kind  at  the  market,  or  some  equitable  rate,  the  pro- 
duce which  they  have  subscribed.  If  arrangements  can  be 
made  by  which  this  produce  may  be  used  by  the  Govern- 
ment, either  as  a  remittance,  or  as  a  means  of  making  re- 
mittances for  the  purchases  required,  it  would  enable  the 
Government  to  make  available,  as  cash,  a  large  amount  of 
its  bonds.  The  extent  to  which  this  operation  could  be 
carried,  can  only  be  determined  by  actual  experiment.  It 
certainly  would  not  exceed  the  amount  of  the  Produce  Loan. 
There  w^ould  be  considerable  difficulty  in  the  administration 
of  the  details ;  and  a  large  confidence  must  be  reposed  in 
the  agents.  But  if  Congress  should  see  fit  to  attempt  the 
experiment,  due  efforts  will  be  made  to  carry  it  into  execu- 
tion. 

These  various  considerations  may  be  reduced  into  form  in 
the  followino;  suc-o-estions : 

1 .  That  authority  be  given  to  increase  the  issue  of  Trea- 
sury Notes  to  fifty  millions  more. 

2.  That  the  Secretary  of  the  Treasury  be  authorized  to 
keep  a  reserve  of  Treasury  Notes  not  exceeding  t.en  millions, 
and  that  he  be  authorized  to  issue  the  same  to  holders  of  de- 
posit certificates  upon  any  sudden  and  unexpected  call — the 
issue  to  be  reduced  within  the  reserve  fund  as  soon  as  pos- 
sible. 


11 

3.  That  an  additional  issue  of  bonds  or  stock  to  the  amount 
of  $164,004,427  10,  be  authorized  upon  the  plan  already 
adopted. 

4.  That  subscriptions  in  kind  be  taken  for  this  loan  of  all 
articles  required  by  the  Government,  to  be  exchanged  for 
the  said  bonds. 

5.  That  cotton  and  tobacco,  and  other  agricultural  pro- 
ducts, subscribed  to  the  Produce  Loan,  may  be  accepted  at 
a  valuation  in  exchange  for  the  bonds  to  such  extent,  and 
under  such  regulations  as  may  be  determined  by  Congress — 
the  Secretary  of  the  Treasury  to  have  authority  to  ship  or 
sell,  or  procure  advances  upon  such  produce  for  the  use  of 
the  Government. 

6.  That  Congress  impose  an  additional  War  Tax  for  such 
amount  as  will  sustain  the  additional  loan  which  they  may 
authorize;  and  that  the  said  tax  be  collected  at  as  early  a 
day  in  the  present  year  as  may  be  practicable. 

7.  And,  finally,  to  provide  the  machinery  required  for 
these  plans,  let  the  Secretary  of  the  Treasury  be  authorized 
to  employ  such  agents  as  may  be  necessary  to  carry  out 
these  plans,  and  direct  the  employment  of  such  additional 
clerks  by  the  Assistant  Treasurers,  and  in  the  Treasury 
Department,  as  may  become  necessary. 

The   various  schedules  and  estimates  to  which  reference 
is  made  in  the  above  report,  are  herewith  submitted  in  de- 
tail for  the  information  of  Congress. 
All  which  is  respectfully  submitted  by 

Your  obedient  servant, 
C.  G.  MEMMINGER, 

Sec'y  of  TreLsury. 
Hon.  Thos.  S.  Bocock, 

Speaker  of  the  Hotise  of  Representatives 

of  the  Confederate  States, 


pH8.5 


